Tesco is axing night shifts in some of its biggest supermarkets in a fresh shakeup that puts 3,000 jobs at risk.
The UK’s biggest retailer said the consultation process with night workers in the 69 impacted stores would begin this summer.
As part of the changes, eight stores will stop trading round the clock, while other roles will be eliminated by plans to merge customer service counters with lottery and tobacco kiosks.
Tesco expects the majority of staff affected to stay on, though night workers, who are paid more for working unsociable hours, could experience a drop in earnings if they do.
Dave Lewis, the chief executive, who earned the nickname “drastic Dave” after cutting jobs when he worked at Unilever, has eliminated more than 10,000 jobs at Tesco since being parachuted in to lead a turnaround of the business in 2014.
The latest changes are part of a cost-cutting drive designed to improve the efficiency of Tesco stores before its controversial £3.7bn takeover of Booker, the cash and carry company behind the Londis and Budgens convenience store chains.
Tesco UK’s chief executive said the changes meant stores could be run more simply and were in keeping with its goal to improve customer service. “We appreciate these changes will impact the roles of some of our colleagues and we will work with them to ensure they are fully supported throughout this period,” Matt Davies said.
Bricks-and-mortar retailers are having to rethink their business models in the face of aggressive online competitors as well as higher costs after this month’s hike in the national living wage from £7.20 to £7.50 and the recent business rate changes.
This year Waitrose said 700 staff were impacted by the closure of six stores and it planned to streamline store management. Its sister chain John Lewis announced it was axing nearly 800 jobs in its customer restaurants and store administration.
Lewis took the helm at Tesco after a string of profit warnings under his predecessor, Philip Clarke. But the discovery of accounting irregularities forced him to embark on an overhaul of the business, including the disposal of its South Korean chain Homeplus for £4bn.
Last week Tesco agreed to pay £235m to settle investigations by the Serious Fraud Office (SFO) and Financial Conduct Authority into the accounting scandal. It will pay a £129m fine as part of a deferred prosecution agreement (DPA) with the SFO, though this deal requires court approval.
The DPA relates to Tesco subsidiary Tesco Stores Ltd. The supermarket has also agreed to pay £85m in compensation to investors affected by the window when there was a false market for its shares.
After the accounting scandal Lewis led a restructuring of the group, which is the UK’s biggest private sector employer. In his first year in charge he axed nearly 5,000 head office and UK store management jobs as well as more than 4,000 roles overseas and at the group’s banking division. A further 2,500 jobs were lost with the closure of 43 underperforming Tesco stores.
The retailer has been reviewing its store operations for some time and last year carried out a similar exercise with 2,000 workers affected when it dropped the night shift in 46 stores, with 20 ceasing round-the-clock trading.
In February, Tesco also axed a layer of management in its smallest Express stores. It involved 1,700 deputy managers being replaced with 3,300 lower-paid “shift leaders”. The closure of two distribution centres at the start of the year also led to the loss of about 500 jobs.
Lewis is expected to face tough questions about the merits of the Booker deal when the company reports its annual results next week after two major shareholders revealed their opposition to the deal. Schroders and Artisan Partners, which between them own 9% of the company, have written separately to the Tesco chairman, John Allan, to ask him to pull out of the deal.
Berstein analyst Bruno Monteyne said the broker’s poll of investors found support for the deal among Tesco and Booker shareholders was “high but not overwhelming”.
“We estimate based on the survey that the deal today would be approved by 70% of votes cast,” he said. “If Schroders and Artisan want to block the deal, it will be hard but not unsurmountable. There are sufficient large holders that haven’t disclosed their view that could sway this estimate.”
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